NGL Energy Partners LP - Annual Report: 2020 (Form 10-K)

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•	changes in general economic conditions, including market and macroeconomic disruptions resulting from the novel strain of coronavirus (“COVID-19”) pandemic and related governmental responses;

•	the prices of crude oil, natural gas liquids, gasoline, diesel, and biodiesel;

•	energy prices generally;

•	the general level of crude oil, natural gas, and natural gas liquids production;

•	the general level of demand, and the availability of supply, for crude oil, natural gas liquids, gasoline, diesel, and biodiesel;

•	the level of crude oil and natural gas drilling and production in areas where we have water treatment and disposal facilities;

•	the ability to obtain adequate supplies of products if an interruption in supply or transportation occurs and the availability of capacity to transport products to market areas;

•	actions taken by foreign oil and gas producing nations;

•	the political and economic stability of foreign oil and gas producing nations;

•	the effect of weather conditions on supply and demand for crude oil, natural gas liquids, gasoline, diesel, and biodiesel;

•	the effect of natural disasters, lightning strikes, or other significant weather events;

•	the availability of local, intrastate, and interstate transportation infrastructure with respect to our truck, railcar, and barge transportation services;

•	the availability, price, and marketing of competing fuels;

•	the effect of energy conservation efforts on product demand;

•	energy efficiencies and technological trends;

•	changes in applicable laws and regulations, including tax, environmental, transportation, and employment regulations, or new interpretations by regulatory agencies concerning such laws and regulations and the effect of such laws and regulations (now existing or in the future) on our business operations;

•	the effect of legislative and regulatory actions on hydraulic fracturing, water disposal and transportation, and the treatment of flowback and produced water;

•	hazards or operating risks related to transporting and distributing petroleum products that may not be fully covered by insurance;

•	the maturity of the crude oil, natural gas liquids, and refined products industries and competition from other markets;

•	loss of key personnel;

•	the ability to renew contracts with key customers;

•	the ability to maintain or increase the margins we realize for our terminal, barging, trucking, water disposal, recycling, and discharge services;

•	the ability to renew leases for our leased equipment and storage facilities;

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•	the nonpayment, nonperformance or bankruptcy by our counterparties;

•	the availability and cost of capital and our ability to access certain capital sources;

•	a deterioration of the credit and capital markets;

•	the ability to successfully identify and complete accretive acquisitions, and integrate acquired assets and businesses;

•	changes in the volume of crude oil recovered during the water treatment process;

•	changes in the financial condition and results of operations of entities in which we own noncontrolling equity interests;

•	the costs and effects of legal and administrative proceedings;

•	political pressure and influence of environmental groups upon policies and decisions related to the production, gathering, refining, processing, fractionation, transportation and marketing of crude oil, refined products, natural gas, natural gas liquids, gasoline, diesel or biodiesel;

•	changes in the jurisdictional characteristics of, or the applicable regulatory policies with respect to, our pipeline assets; and

•	other risks and uncertainties, including those discussed under Part I, Item 1A–“Risk Factors.”

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Our Crude Oil Logistics segment purchases crude oil from producers and marketers and transports it to refineries or for resale at pipeline injection stations, storage terminals, barge loading facilities, rail facilities, refineries, and other trade hubs, and provides storage, terminaling and transportation services through its owned assets. Our activities in this segment are supported by certain long-term, fixed rate contracts which include minimum volume commitments on our pipelines.

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Our Water Solutions segment transports, treats, recycles and disposes of produced and flowback water generated from crude oil and natural gas production. We also dispose of solids such as tank bottoms, drilling fluids and drilling muds and perform other ancillary services such as truck and frac tank washouts. As part of processing water, we are able to aggregate recovered crude oil, also known as skim oil, that was contained in the water and sell the crude oil. We also sell brackish non-potable water to our producer customers to be used in their crude oil exploration and production activities. Our activities in the Water Solutions segment are underpinned by long-term, fixed fee contracts and acreage dedications, some of which contain minimum volume commitments, with leading oil and gas companies including large, investment grade producer customers.

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Our Liquids and Refined Products segment conducts marketing operations for natural gas liquids, refined petroleum products and biodiesel to a broad range of commercial, retail and industrial customers across the United States and Canada. These operations are conducted through our 28 company-owned terminals, other third party storage and terminal facilities, common carrier pipelines and our extensive fleet of leased railcars. We also provide natural gas liquid and refined product terminaling and storage services at our salt dome storage facility joint venture in Utah and marine exports through our facility located in Chesapeake, Virginia. We employ a number of contractual and hedging strategies to minimize commodity exposure and maximize earnings stability of this segment.

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•	On November 7, 2019, we acquired the exclusive rights to use certain land in Lea County, New Mexico for produced and treated water operations from one entity, certain membership interests in another entity and other assets.

•	During the year ended March 31, 2020, we acquired one saltwater disposal facility (including three saltwater disposal wells) in Eddy County, New Mexico.

•	During the year ended March 31, 2020, we acquired land and two saltwater disposal wells in Pecos County, Texas.

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•	During the year ended March 31, 2019, we acquired six saltwater disposal facilities (including 22 saltwater disposal wells), two ranches and four brackish non-potable water facilities (including 45 brackish non-potable water wells).

•	During the year ended March 31, 2018, we acquired the remaining 50% ownership interest in NGL Solids Solutions, LLC.

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(1)

Includes (i) NGL Crude Logistics, LLC, which includes the operations of our Crude Oil Logistics business and certain businesses within our Liquids and Refined Products segment, (ii) NGL Water Solutions, LLC, which includes the operations of our Water Solutions business and (iii) NGL Liquids, LLC, which includes the operations of certain of our businesses within our Liquids and Refined Products segment.

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•	Focus on building a diversified midstream master limited partnership providing multiple services to customers. We continue to enhance our ability to transport crude oil from the wellhead to refiners, produced water from the wellhead to treatment for disposal, recycle, or discharge, and natural gas liquids from processing plants and supply hubs to end users.

•	Operate in a safe and environmentally responsible manner. We seek to operate our business in a safe and environmentally responsible manner by working with our employees, customers, vendors and local communities to minimize our environmental impact and comply with local, state and federal environmental laws and regulations.

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Focus on consistent annual cash flows from operations under multi-year contracts that minimize commodity price risk and generate fee-based revenues. We intend to focus on generating revenues under long-term fee-based contracts in addition to back-to-back contracts which minimize direct commodity price exposure. We seek to continue to increase cash flows that are supported by certain fee-based, multi-year contracts, some of which include acreage dedications from producers or minimum volume commitments.

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Achieve growth by investing in new assets, customers and ventures that increase volumes, enhance our operations, and generate attractive rates of return. We have invested and expect to continue to invest within our existing businesses to capitalize on accretive, organic growth opportunities. We have available capacity in many of the assets that we own and operate that can be utilized to increase cash flows with minimal incremental capital investment. We also continue to pursue strategic transactions and ventures that complement and enhance our existing footprint.

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Prudently manage our balance sheet to provide us with maximum financial flexibility for funding our operations, capital projects and strategic acquisitions. We will seek to maintain sufficient liquidity and credit metrics to manage existing and future capital requirements and to take advantage of market opportunities. We expect to continue to evaluate the capital markets and may opportunistically pursue financing transactions to optimize our capital structure.

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Our diversified operations allow us to generate more predictable and stable cash flows on a year-to-year basis. Our ability to provide multiple services to customers in numerous geographic areas enhances our competitive position. Our three business units are diversified by geography, customer base and commodity sensitivities, which we believe provides us with more stable cash flows through the typical commodity cycles.

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Our network of crude oil transportation and storage assets, which allows us to serve customers over a wide geographic area and optimize sales. Our strategically deployed terminals, towboats, barges, trucks, and our owned and contracted pipeline capacity, provide access to a wide range of customers and markets. We use this expansive network of transportation assets to deliver crude oil to the optimal markets. These operations are supported by long-term, fee-based contracts with producers, refiners and marketers.

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Our water processing facilities, which are strategically located near areas of high crude oil and natural gas production. Our water processing facilities are located among the most prolific crude oil and natural gas producing areas in the United States, including the Delaware Basin, the Midland Basin, the DJ Basin and the Eagle Ford Basin. In addition, we believe that the technological capabilities of our Water Solutions business can be quickly implemented at new facilities and locations. These assets are also supported by long-term, fee-based contracts that include acreage dedications and minimum volume commitments.

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Our network of natural gas liquids transportation, terminal, and storage assets, which allows us to provide multiple services across the continental United States. Our strategically located terminals, large leased railcar fleet, shipper status on common carrier pipelines, and substantial leased and owned underground storage enable us to be a preferred purchaser and seller of natural gas liquids. We have a diverse base of long-standing customers

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Our seasoned management team with extensive midstream industry experience and a track record of acquiring, integrating, operating and growing successful businesses. Our management team has significant experience managing companies in the energy industry, including master limited partnerships. In addition, through decades of experience, our management team has developed strong business relationships with key industry participants throughout the United States. We believe that our management’s knowledge of the industry, relationships within the industry, and experience provide us with the opportunities to optimize our existing assets. Our management team also has experience in identifying, evaluating and completing acquisitions and other ventures that provide us with additional opportunities to complement, grow and expand our existing operations.

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•	The Grand Mesa Pipeline, which is described above, and 20 other common carrier pipelines owned by third parties;

•	131 owned trucks and 214 owned trailers operating primarily in the Mid-Continent, Permian Basin, Eagle Ford Basin, and Rocky Mountain regions;

•	397 owned railcars (all of which are leased to third parties) and 246 leased railcars (all of which are subleased to third parties); and

•	11 owned towboats and 23 owned barges operating primarily in the intercoastal waterways of the Gulf Coast and along the Mississippi and Arkansas River systems. We accepted delivery of a newly constructed barge in April 2020 and expect to accept delivery of a second newly constructed barge in July 2020.

•	price;

•	availability of supply;

•	reliability of service;

•	logistics capabilities, including the availability of railcars, proprietary terminals, and owned pipelines, barges, railcars, trucks, and towboats;

•	long-term customer relationships; and

•	the acquisition of businesses.

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•	we require certain customers to prepay or place deposits for our products and services;

•	we require certain customers to post letters of credit or other forms of surety on a portion of our receivables;

•	we review receivable aging analyses regularly to identify issues or trends that may develop; and

•	we require our marketing personnel to manage their customers’ receivable position and suspend sales to customers that have not timely paid invoices.

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(1)	These facilities are located on lands we own.

(2)	These facilities are located on lands we lease.

(3)	Certain facilities can dispose of both produced water and solids such as tank bottoms, drilling fluids and drilling muds.

(4)	Includes one facility with a permitted processing capacity of 40,000 barrels per day in which we own a 75% interest.

(5)	This facility has a design capacity of 72,765 barrels per day to process water to a recycle standard.

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•	we require certain customers to prepay or place deposits for our services;

•	we require certain customers to post letters of credit or other forms of surety on a portion of our receivables;

•	we review receivable aging analyses regularly to identify issues or trends that may develop; and

•	we require our marketing personnel to manage their customers’ receivable position and suspend service to customers that have not timely paid invoices.

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•	price;

•	availability of supply;

•	reliability of service;

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•	available space on common carrier pipelines;

•	storage availability;

•	logistics capabilities, including the availability of railcars, and proprietary terminals;

•	long-term customer relationships; and

•	the acquisition of businesses.

•	customer pre-buys, which typically require deposits based on market pricing conditions;

•	market based, which can either be a posted price or an index to spot price at time of delivery; and

•	load package, a firm price agreement for customers seeking to purchase specific volumes delivered during a specific time period.

•	we require certain customers to prepay or place deposits for their purchases;

•	we require certain customers to post letters of credit or other forms of surety on a portion of our receivables;

•	we monitor individual customer receivables relative to previously-approved credit limits, and our rack delivery system gives us the option to discontinue providing product to customers when they exceed their credit limits;

•	we require certain customers to take delivery of their contracted volume ratably to help control the account balance rather than allowing them to take delivery of propane at their discretion;

•	we review receivable aging analysis regularly to identify issues or trends that may develop; and

•	we require our marketing personnel to manage their customers’ receivable position and suspend sales to customers that have not timely paid invoices.

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•	shaping decisions regarding what types of pollution-control equipment to deploy and how a facility should be designed;

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informed construction activities, such as where to locate and where not to locate a facility, e.g., locating construction activities away from sensitive environmental, cultural or historic areas, including wetlands, coastal regions or areas inhabited by endangered or threatened species, and limiting or prohibiting construction activities during certain sensitive periods, such as when threatened or endangered species are breeding/nesting;

•	informed decision-making regarding the timing of activities, for example, we will delay construction or system modification or upgrades during the issuance or renewal periods of certain permits;

•	informed decision-making pertaining to our approach to investigating, mitigating and remediating unplanned releases from our facilities and operations or attributable to former facilities or operations, as necessary and appropriate; and

•	shaping our decision-making about whether a facility or operation should be temporarily halted to address potential non-compliance with relevant permit requirements.

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•	the cost of crude oil, natural gas liquids, gasoline, diesel, ethanol, and biodiesel that we buy for resale and whether we are able to pass along cost increases to our customers;

•	the volume of produced water delivered to our processing facilities;

•	disruptions in the availability of crude oil and/or natural gas liquids supply;

•	our ability to renew leases for storage and railcars;

•	the effectiveness of our commodity price hedging strategy;

•	weather conditions across the United States;

•	the level of competition from other energy providers; and

•	prevailing economic conditions.

•	the level of capital expenditures we make;

•	the cost of acquisitions, if any;

•	restrictions contained in the credit agreement (the “Credit Agreement”), the term credit agreement (the “Term Credit Agreement”) the indentures governing our outstanding 7.50% senior notes due 2023, 6.125% senior notes due 2025 and 7.50% senior notes due 2026 (collectively, the “Indentures”) and other debt service requirements;

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•	restrictions contained in the agreements relating to our 9.00% Class B Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units (“Class B Preferred Units”), 9.625% Class C Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units (“Class C Preferred Units”) and 9.00% Class D Preferred Units (“Class D Preferred Units”) (collectively the “Preferred Units”);

•	fluctuations in working capital needs;

•	our ability to borrow funds and access capital markets;

•	the amount, if any, of cash reserves established by our general partner; and

•	other business risks discussed in this Annual Report that may affect our cash levels.

•	increased competition for attractive acquisitions;

•	covenants in the Credit Agreement, Term Credit Agreement and Indentures that limit the amount and types of indebtedness that we may incur to finance acquisitions and which may adversely affect our ability to make distributions to our unitholders;

•	lack of available cash or external capital or limitations on our ability to issue equity to pay for acquisitions; and

•	possible unwillingness of prospective sellers to accept our common units as consideration and the potential dilutive effect to our existing unitholders caused by an issuance of common units in an acquisition.

•	the inability to successfully integrate the operations of recently acquired businesses;

•	the assumption of known or unknown liabilities, including environmental liabilities;

•	limitations on rights to indemnity from the seller;

•	mistaken assumptions about the overall costs of equity, debt or synergies;

•	mistaken assumptions about sales volume, margin or operational expenses;

•	unforeseen difficulties operating in new geographic areas or in new business segments;

•	the diversion of management’s and employees’ attention from other business concerns;

•	customer or key employee loss from the acquired businesses; and

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•	a potential significant increase in our indebtedness and related interest expense.

•	our ability to obtain additional financing, if necessary, for working capital, capital expenditures, acquisitions or other purposes may be impaired or such financing may not be available on favorable terms;

•	our funds available for operations, future business opportunities and distributions to unitholders will be reduced by that portion of our cash flow required to make principal and interest payments on our debt;

•	we may be more vulnerable to competitive pressures or a downturn in our business or the economy generally; and

•	our flexibility in responding to changing business and economic conditions may be limited.

•	incur additional debt or issue letters of credit;

•	redeem or repurchase units;

•	make certain loans, investments and acquisitions;

•	incur certain liens or permit them to exist;

•	engage in sale and leaseback transactions;

•	enter into certain types of transactions with affiliates;

•	enter into agreements limiting subsidiary distributions;

•	change the nature of our business or enter into a substantially different business;

•	merge or consolidate with another company; and

•	transfer or otherwise dispose of assets.

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•	a recession or other adverse economic condition that results in lower spending by consumers on gasoline, diesel, and travel;

•	higher fuel taxes or other governmental or regulatory actions that increase, directly or indirectly, the cost of gasoline;

•	an increase in automotive engine fuel economy, whether as a result of a shift by consumers to more fuel-efficient vehicles or technological advances by manufacturers;

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•	an increase in the market price of crude oil that leads to higher refined product prices, which may reduce demand for refined products and drive demand for alternative products; and

•	the increased use of alternative fuel sources, such as battery-powered engines.

•	77% of the revenues of our Crude Oil Logistics segment were generated from our ten largest customers of the segment;

•	52% of the water treatment and disposal revenues of our Water Solutions segment were generated from our ten largest customers of the segment; and

•	22% of the revenues of our Liquids and Refined Products segment were generated from our ten largest customers of the segment.

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limits the liability and reduces the fiduciary duties of our general partner, while also restricting the remedies available to our unitholders for actions that, without these limitations, might constitute breaches of fiduciary duty. As a result of purchasing common units, our unitholders consent to some actions and conflicts of interest that might otherwise constitute a breach of fiduciary or other duties under applicable state law;

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permits our general partner to make a number of decisions in its individual capacity, as opposed to in its capacity as our general partner. This entitles our general partner to consider only the interests and factors that it desires, and it has no duty or obligation to give any consideration to any interest of, or factors affecting, us, our affiliates or any limited partner. Examples include the exercise of its limited call right, its voting rights with respect to the units it owns and its determination whether or not to consent to any merger or consolidation of the Partnership;

•	provides that our general partner shall not have any liability to us or our unitholders for decisions made in its capacity as general partner so long as it acted in good faith, meaning our general partner subjectively believed that the decision was in, or not opposed to, the best interests of the Partnership;

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generally provides that affiliated transactions and resolutions of conflicts of interest not approved by the conflicts committee of the board of directors of our general partner and not involving a vote of our unitholders must be on terms no less favorable to us than those generally being provided to or available from unrelated third parties or be “fair and reasonable” to us and that, in determining whether a transaction or resolution is “fair and reasonable,” our general partner may consider the totality of the relationships between the parties involved, including other transactions that may be particularly favorable or advantageous to us; and

•	provides that our general partner and its officers and directors will not be liable for monetary damages to us or our limited partners for any acts or omissions unless there has been a final and non-appealable judgment entered by a court of competent jurisdiction determining that our general partner or those other persons acted in bad faith or engaged in fraud or willful misconduct.

•	our general partner is allowed to take into account the interests of parties other than us, such as members of the NGL Energy GP Investor Group, in resolving conflicts of interest;

•	neither our partnership agreement nor any other agreement requires owners of our general partner to pursue a business strategy that favors us;

•	except in limited circumstances, our general partner has the power and authority to conduct our business without unitholder approval;

•	our general partner determines the amount and timing of asset purchases and sales, borrowings, issuance of additional partnership securities and the creation, reduction or increase of reserves, each of which can affect the amount of cash that is distributed to our unitholders;

•	our general partner determines the amount and timing of any capital expenditures and whether a capital expenditure is classified as a maintenance capital expenditure, which reduces operating surplus, or an expansion capital expenditure, which does not reduce operating surplus. This determination can affect the amount of cash that is distributed to our unitholders and to our general partner;

•	our general partner determines which costs incurred by it are reimbursable by us;

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•	our general partner may cause us to borrow funds to permit the payment of cash distributions, even if the purpose or effect of the borrowing is to make incentive distributions;

•	our partnership agreement permits us to classify up to $20.0 million as operating surplus, even if it is generated from asset sales, non-working capital borrowings or other sources that would otherwise constitute capital surplus. This cash may be used to fund distributions to our general partner in respect of the general partner interest or the incentive distribution rights (“IDRs”);

•	our partnership agreement does not restrict our general partner from causing us to pay it or its affiliates for any services rendered to us or entering into additional contractual arrangements with any of these entities on our behalf;

•	our general partner intends to limit its liability regarding our contractual and other obligations;

•	our general partner may exercise its right to call and purchase all of the common units not owned by it and its affiliates if they own more than 80% of the common units;

•	our general partner controls the enforcement of the obligations that it and its affiliates owe to us;

•	our general partner decides whether to retain separate counsel, accountants or others to perform services for us; and

•	our general partner may elect to cause us to issue common units to it in connection with a resetting of the target distribution levels related to our general partner’s IDRs without the approval of the conflicts committee of the board of directors of our general partner or our unitholders. This election may result in lower distributions to our common unitholders in certain situations.

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•	our existing unitholders’ proportionate ownership interest in us will decrease;

•	the amount of available cash for distribution on each unit may decrease;

•	the ratio of taxable income to distributions may increase;

•	the relative voting strength of each previously outstanding unit may be diminished; and

•	the market price of the common units may decline.

•	we were conducting business in a state but had not complied with that particular state’s partnership statute; or

•	a unitholder’s right to act with other unitholders to remove or replace our general partner, to approve some amendments to our partnership agreement or to take other actions under our partnership agreement constitute “control” of our business.

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Item 5.	Market for Registrant’s Common Equity, Related Unitholder Matters and Issuer Purchases of Equity Securities

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(1)	The maximum distribution of 48.1% does not include distributions that our general partner may receive on common units that it owns.

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(1)

We adopted ASC 842 “Leases” effective April 1, 2019 using the modified retrospective method, with no adjustment to comparative period information. This guidance requires the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases. See Note 16 to our consolidated financial statements included in this Annual Report for a further discussion of the impact of adoption of ASC 842 to our consolidated financial statements.

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(1)	Revenues include $18.2 million and $36.1 million of intersegment sales during the years ended March 31, 2020 and 2019, respectively, that are eliminated in our consolidated statements of operations.

(2)	Information is presented as of March 31, 2020 and March 31, 2019, respectively.

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(1)	Barrels per day of produced water processed by the assets acquired in the Mesquite and Hillstone transactions are calculated by the number of days in which we owned the assets during the period presented.

(2)	Total produced water barrels processed during the years ended March 31, 2020 and 2019 were 485,115,941 and 345,696,444, respectively.

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a goodwill impairment charge of $250.0 million related to the current macroeconomic conditions including the collapse of oil prices driven by both the decrease in demand caused by the COVID-19 pandemic and excess supply, as well as changing market conditions and expected lower crude oil production in certain regions, resulting in expected decreases in future cash flows for certain of our assets (see Note 6 to our consolidated financial statements included in this Annual Report);

•	an impairment charge of $13.5 million related to certain inactive saltwater disposal facilities;

•	a net loss of $9.2 million on the disposals of certain other assets;

•	a gain of $14.5 million for the sale of certain water permits; and

•	a gain of $1.0 million for cash received related to a loan receivable that was previously written off.

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(1)	Revenues include $5.0 million and $23.3 million of intersegment sales during the years ended March 31, 2020 and 2019, respectively, that are eliminated in our consolidated statements of operations.

(2)	Revenues include $10.3 million and $64.8 million of intersegment sales during the years ended March 31, 2020 and 2019, respectively, between certain businesses within the Liquids and Refined Products segment and TPSL, Mid-Con and Gas Blending that are eliminated in our consolidated statements of operations.

(3)	Cost of sales include $8.2 million and $62.9 million of intersegment cost of sales during the years ended March 31, 2020 and 2019, respectively, between certain businesses within the Liquids and Refined Products segment and TPSL, Mid-Con and Gas Blending that are eliminated in our consolidated statements of operations.

(4)	Information is presented as of March 31, 2020 and March 31, 2019, respectively.

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(1)

Relates primarily to a loan receivable associated with our interest in the construction of a natural gas liquids loading/unloading facility that is utilized by a third party. The third party filed for Chapter 11 bankruptcy protection during the three months ended September 30, 2019 (see Note 2 to our consolidated financial statements included in this Annual Report for a further discussion). Also includes a loan receivable with Victory Propane (see Note 13 to our consolidated financial statements included in this Annual Report for a further discussion).

(2)	Represents the accrual for the estimated cost of the settlement of the Gavilon legal matter (see Note 9 to our consolidated financial statements included in this Annual Report for a further discussion).

(3)	During the year ended March 31, 2019, this relates primarily to unrealized losses on marketable securities.

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(1)	Revenues include $36.1 million and $13.9 million of intersegment sales during the years ended March 31, 2019 and 2018, respectively, that are eliminated in our consolidated statements of operations.

(2)	Information is presented as of March 31, 2019 and March 31, 2018, respectively.

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(1)	Total produced water barrels processed during the years ended March 31, 2019 and 2018 were 345,696,444 and 258,168,267, respectively.

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(1)	Revenues include $23.3 million and $5.0 million of intersegment sales during the years ended March 31, 2019 and 2018, respectively, that are eliminated in our consolidated statements of operations.

(2)	Revenues include $64.8 million and $16.6 million of intersegment sales during the years ended March 31, 2019 and 2018, respectively, related to transactions with TPSL, Mid-Con and Gas Blending that are eliminated in our consolidated statements of operations.

(3)	Cost of sales include $62.9 million and $229.0 million of intersegment cost of sales during the years ended March 31, 2019 and 2018, respectively, related to transactions with TPSL, Mid-Con and Gas Blending that are eliminated in our consolidated statements of operations.

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(1)

During the year ended March 31, 2019, this relates primarily to a loan receivable associated with our interest in the construction of a natural gas liquids loading/unloading facility that is utilized by a third party. During the year ended March 31, 2018, this relates primarily to a loan receivable associated with our interest in the construction of a natural gas liquids loading/unloading facility that is utilized by a third party and a loan receivable with Victory Propane (see Note 13 to our consolidated financial statements included in this Annual Report for a further discussion).

(2)	Represents the accrual for the estimated cost of the settlement of the Gavilon legal matter (see Note 9 to our consolidated financial statements included in this Annual Report for a further discussion).

(3)	During the year ended March 31, 2019, this relates primarily to unrealized losses on marketable securities. During the year ended March 31, 2018, this relates primarily to proceeds from a litigation settlement.

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(1)	Amount reflects the difference between the market value of the inventory at the balance sheet date and its cost, adjusted for the impact of seasonal market movements related to our base inventory and the related hedge. See “Non-GAAP Financial Measures” section above for a further discussion.

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(2)

Equity-based compensation expense in the table above may differ from equity-based compensation expense reported in Note 10 to our consolidated financial statements included in this Annual Report. Amounts reported in the table above include expense accruals for bonuses expected to be paid in common units, whereas the amounts reported in Note 10 to our consolidated financial statements only include expenses associated with equity-based awards that have been formally granted.

(3)	Amounts represent expenses we incurred related to legal and advisory costs associated with acquisitions, including Mesquite and Hillstone, along with amounts accrued related to the LCT Capital, LLC legal matter (see Note 9 to our consolidated financial statements included in this Annual Report), partially offset by reimbursement for certain legal costs incurred in prior periods.

(4)

Amount for the year ended March 31, 2020 represents the non-cash valuation adjustment of our contingent consideration liability issued by us as part of our acquisition of Mesquite (see Note 4 to our consolidated financial statements included in this Annual Report), partially offset by the non-cash valuation adjustment of contingent consideration liabilities, offset by the cash payments, related to royalty agreements acquired as part of acquisitions in our Water Solutions segment. Amounts for the years ended March 31, 2019 and 2018 represent the non-cash valuation adjustment of contingent consideration liabilities, offset by the cash payments, related to royalty agreements acquired as part of acquisitions in our Water Solutions segment.

(5)	Represents the accrual for the estimated cost of the settlement of the Gavilon legal matter (see Note 9 to our consolidated financial statements included in this Annual Report). We have excluded this amount from Adjusted EBITDA as it relates to transactions that occurred prior to our acquisition of Gavilon LLC in December 2013.

(6)

Amounts for the years ended March 31, 2020 and 2019 represent non-cash operating expenses related to our Grand Mesa Pipeline, unrealized losses on marketable securities and accretion expense for asset retirement obligations. Amount for the year ended March 31, 2018 represents non-cash operating expenses related to our Grand Mesa Pipeline, an adjustment to inventory related to prior periods and accretion expense for asset retirement obligations.

(7)	Amounts include the operations of TPSL, Gas Blending, Mid-Con and our former Retail Propane segment.

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(1)	Amount reflects the transactions with TPSL, Mid-Con and Gas Blending that are eliminated in consolidation.

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(1)

Amounts for the years ended March 31, 2020, 2019 and 2018 include $49.1 million, $63.6 million and $23.1 million, respectively, of transactions classified as acquisitions of assets. See Note 4 to our consolidated financial statements included in this Annual Report for a further discussion of the transactions classified as acquisitions of assets completed during the year ended March 31, 2020. Amount for the year ended March 31, 2018 includes intangible assets received as consideration as part of the Sawtooth joint venture transaction (see Note 17 to our consolidated financial statements included in this Annual Report). Amounts for the years ended March 31, 2019 and 2018 include $0.4 million and $8.5 million, respectively, related to our former Retail Propane segment. Amount for the year ended March 31, 2019 includes less than $0.1 million related to TPSL. There were no amounts related to TPSL for the years ended March 31, 2020 and 2018.

(2)	Amounts for the years ended March 31, 2019 and 2018 include $3.8 million and $14.0 million, respectively, related to our former Retail Propane segment. There were no amounts related to TPSL for the years ended March 31, 2020, 2019 or 2018.

(3)	Amounts for the years ended March 31, 2019 and 2018 include $31.9 million and $30.5 million, respectively, related to our former Retail Propane segment. Amount for the year ended March 31, 2019 includes $16.3 million related to TPSL. There were no amounts related to TPSL for the years ended March 31, 2020 and 2018.

(4)

Amounts for the years ended March 31, 2020, 2019 and 2018 primarily related to contributions made to unconsolidated entities and the purchase of membership interests in a water services and land company as described in Note 4 to our consolidated financial statements included in this Annual Report. There were no amounts for the years ended March 31, 2020, 2019 or 2018 related to TPSL. There were no amounts for the years ended March 31, 2019 or 2018 related to our former Retail Propane segment.

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•	a $988.7 million increase in cash paid for acquisitions, primarily for Mesquite and Hillstone, and investments in unconsolidated entities during the year ended March 31, 2020;

•	$335.8 million in proceeds from the sales of our Bakken and South Pecos water disposal businesses and our approximately 20% interest in E Energy Adams, LLC during the year ended March 31, 2019; and

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•	an increase in capital expenditures from $455.6 million during the year ended March 31, 2019 to $555.7 million during the year ended March 31, 2020 due primarily to expansion projects in our Delaware Basin system in the Water Solutions segment.

•	an increase in capital expenditures from $133.8 million during the year ended March 31, 2018 to $455.6 million during the year ended March 31, 2019 due primarily to capital expenditures for expansion projects in our Water Solutions segment; and

•	a $280.7 million increase in cash paid for acquisitions during the year ended March 31, 2019.

•	repurchases of $737.1 million of our senior unsecured notes during the year ended March 31, 2019;

•	$622.4 million in net proceeds from the issuance of the Class C Preferred Units and Class D Preferred Units during the year ended March 31, 2020;

•	$450.0 million in proceeds from the issuance of the 2026 Notes during the year ended March 31, 2020;

•	$250.0 million in proceeds from the Term Credit Agreement during the year ended March 31, 2020; and

•	an increase of $97.5 million in borrowings on the Revolving Credit Facility (net of repayments) during the year ended March 31, 2020.

•	$265.1 million in payments for the redemption of the 10.75% Class A Convertible Preferred Units during the year ended March 31, 2020; and

•	$100.0 million in contingent consideration payments as part of the Mesquite acquisition during the year ended March 31, 2020.

•	an increase in repurchases and redemptions of our senior unsecured notes of $250.4 million during the year ended March 31, 2019; and

•	a decrease of $202.7 million due to proceeds received from the sale of our preferred units during the year ended March 31, 2018.

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(1)	The estimated interest payments on the Revolving Credit Facility are based on principal and letters of credit outstanding at March 31, 2020. See Note 8 to our consolidated financial statements included in this Annual Report for additional information on the Credit Agreement.

(2)

We have noncancelable agreements with crude oil pipeline operators, which guarantee us minimum monthly shipping capacity on the pipelines. As a result, we are required to pay the minimum shipping fees if actual shipments are less than our allotted capacity. Under certain agreements we have the ability to recover minimum shipping fees previously paid if our shipping volumes exceed the minimum monthly shipping commitment during each month remaining under the agreement, with some contracts containing provisions that allow us to continue shipping up to six months after the maturity date of the contract in order to recapture previously paid minimum shipping delinquency fees. We also have noncancelable agreements for product storage, railcar spurs and real estate. See Note 9 to our consolidated financial statements included in this Annual Report for further detail of the commitments.

(3)	At March 31, 2020, the construction commitments relate to two new barges currently being built.

(4)

Index prices are based on a forward price curve at March 31, 2020. A theoretical change of $0.10 per gallon of natural gas liquids in the underlying commodity price at March 31, 2020 would result in a change of $120.6 million in the value of our index-price natural gas liquids purchase commitments. A theoretical change of $1.00 per barrel of crude oil in the underlying commodity price at March 31, 2020 would result in a change of $41.2 million in the value of our index-price crude oil purchase commitments. See Note 9 to our consolidated financial statements included in this Annual Report for further detail of the commitments.

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(5)

Our crude oil index-price purchase commitments exceed our crude oil index-price sales commitments (see Note 9 to our consolidated financial statements included in this Annual Report) due primarily to our long-term purchase commitments for crude oil that we purchase and ship on the Grand Mesa Pipeline. As these purchase commitments are deliver-or-pay contracts, whereby our counterparty is required to pay us for any volumes not delivered, we have not entered into corresponding long-term sales contracts for volumes we may not receive.

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•	experience in business, government, education, technology or public interests;

•	high-level managerial experience in large organizations;

•	breadth of knowledge regarding our business and industry;

•	specific skills, experience or expertise related to an area of importance to us, such as energy production, consumption, distribution or transportation, government, policy, finance or law;

•	moral character and integrity;

•	commitment to our unitholders’ interests;

•	ability to provide insights and practical wisdom based on experience and expertise;

•	ability to read and understand financial statements; and

•	ability to devote the time necessary to carry out the duties of a director, including attendance at meetings and consultation on partnership matters.

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•	retain and terminate our independent registered public accounting firm;

•	approve all auditing services and related fees and the terms thereof performed by our independent registered public accounting firm; and

•	establish policies and procedures for the pre-approval of all non-audit services and tax services to be rendered by our independent registered public accounting firm.

•	establishing the general partner’s compensation philosophy and objectives;

•	approving the compensation of the Chief Executive Officer;

•	making recommendations to the board of directors with respect to the compensation of other officers and directors; and

•	reviewing and making recommendations to the board of directors with respect to incentive compensation and equity-based plans.

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•	H. Michael Krimbill–Chief Executive Officer

•	Robert W. Karlovich III–Executive Vice President and Chief Financial Officer

•	Lawrence J. Thuillier–Chief Accounting Officer

•	Kurston P. McMurray–Executive Vice President and General Counsel and Secretary

•	John A. Ciolek–Executive Vice President, Strategic Initiatives (Mr. Ciolek commenced employment in December 2019 and was appointed Executive Vice President, Strategic Initiatives by the board of directors of our general partner in January 2020)

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•	Attract and retain individuals with the background and skills necessary to successfully execute our business strategies;

•	Motivate those individuals to reach short-term and long-term goals in a way that aligns their interests with the interests of our unitholders; and

•	Reward success in reaching those goals.

•	Issued 9.625% Class C Preferred Units for net proceeds of $42.9 million;

•	Issued 9.00% Class D Preferred Units for net proceeds of $580.1 million;

•	Issued 7.50% Senior Unsecured Notes Due 2026 for net proceeds of $442.1 million;

•	On July 2, 2019, we acquired all of the assets of Mesquite Disposals Unlimited for total consideration of $895.3 million;

•	On September 30, 2019, we sold TPSL for total consideration of $233.8 million; and

•	On October 31, 2019, we acquired all of the equity interests of Hillstone Environmental Partners, LLC for total consideration of $642.5 million.

•	We paid cash bonuses to Mr. Krimbill, Mr. Karlovich and Mr. McMurray during fiscal year 2020, primarily due to their work related to the acquisitions of Mesquite Disposals Unlimited and Hillstone Environmental Partners, LLC and for the sale of TPSL.

•	The salaries of most of our named executive officers remain below the median of our benchmark peer group. This enables us to grant more performance-based compensation to maintain competitive total compensation packages and achieve a greater degree of alignment of pay and performance.

•	Majority of named executive officer pay is at risk incentive compensation based on annual financial performance and growth in unitholder value;

•	Equity-based incentives are the largest single component of named executive officer compensation;

•	No excise tax gross-ups; and

•	Compensation committee engages an independent compensation adviser.

•	Role of Management: Our Chief Executive Officer provides periodic recommendations to the compensation committee and the board of directors regarding the compensation of our named executive officers, other than his own.

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Role of the Compensation Committee’s Consultant: In carrying out its responsibilities for establishing, implementing and monitoring the effectiveness of our executive compensation philosophy, plans and programs, our compensation committee has the authority to engage outside experts to assist in its deliberations. During fiscal year 2020, the compensation committee received compensation advice and data from Pearl Meyer & Partners (“PM&P”). PM&P conducted a competitive review of the principal components of compensation for our directors. The compensation committee reviewed the services provided by PM&P and determined that they are

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◦	PM&P did not provide any services to the Partnership or management other than compensation consulting services requested by or with the approval of the compensation committee;

◦	PM&P does not provide, directly or indirectly through affiliates, any non-compensation services such as pension consulting or human resource outsourcing;

◦	PM&P maintains a conflicts policy, which was provided to the compensation committee with specific policies and procedures designed to ensure independence;

◦	Fees paid to PM&P by the Partnership during fiscal year 2020 were less than 1% of PM&P’s total revenue;

◦	None of the PM&P consultants working on Partnership matters had any business or personal relationship with compensation committee members;

◦	None of the PM&P consultants working on Partnership matters (or any consultants at PM&P) had any business or personal relationship with any executive officer of the Partnership; and

◦	None of the PM&P consultants working on Partnership matters own Partnership interests.

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•

Mr. Krimbill’s initial base salary of $120,000 was originally determined as part of the negotiations for our formation transactions. Effective July 1, 2014, the board of directors increased Mr. Krimbill’s salary to $350,000, in consideration of the fact that his salary was low relative to the benchmark peer group (and remains below the 25th percentile of the peer group). Effective April 1, 2018, Mr. Krimbill’s base salary was increased to $625,000, in consideration of the fact that his salary was low relative to the benchmark peer group.

•	Mr. Karlovich’s base salary of $400,000 was negotiated prior to his joining our management team in February 2016. Mr. Karlovich’s base salary was increased to $430,000 in April 2017. On June 10, 2018, Mr. Karlovich’s salary was increased to $500,000, in consideration of the fact that his salary was low relative to the benchmark peer group.

•	Mr. Thuillier’s base salary of $250,000 was negotiated prior to his joining our management team in January 2016. In April 2017, Mr. Thuillier’s base salary was increased to $260,000. In April 2018, Mr. Thuillier’s base salary was increased to $268,000. Effective March 31, 2019, Mr. Thuillier’s base salary was increased to $270,000.

•	Mr. McMurray’s base salary of $250,000 was negotiated prior to his joining our management team in February 2015. Mr. McMurray’s base salary was increased to $300,000 in April 2017. Effective April 1, 2018, Mr. McMurray’s base salary was increased to $350,000. Effective March 31, 2019, Mr. McMurray’s base salary was increased to $375,000.

•	Mr. Ciolek’s base salary of $500,000 was negotiated prior to joining our management team in December 2019.

(1)	Mr. Krimbill vested in 100,000 Service Awards on July 10, 2019, 75,302 Service Awards on August 21, 2019 and 75,000 Service Awards on February 11, 2020. He was granted 75,302 Service Awards on August 21, 2019.

(2)	Mr. Karlovich vested in 7,531 Service Awards on August 21, 2019, 12,500 Service Awards on November 13, 2019 and 12,500 Service Awards on February 11, 2020, respectively. He was granted 7,531 Service Awards on August 21, 2019.

(3)	Mr. Thuillier vested in Service Awards of 10,166 on August 21, 2019, 5,000 on November 13, 2019 and 5,000 on February 11, 2020. He was granted 10,166 Service Awards on August 21, 2019.

(4)	Mr. McMurray vested in 7,531 Service Awards on August 21, 2019, 7,500 Service Awards on November 13, 2019 and 7,500 Service Awards on February 11, 2020. He was granted 7,531 Service Awards on August 21, 2019.

(5)	Mr. Ciolek was granted 50,000 Service Awards on January 21, 2020, of which 12,500 vested on February 11, 2020.

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(1)

All of the Service Awards in the table above will vest as follows, with the exception of Mr. McMurray: For the fiscal year ending March 31, 2021, half of the units will vest on November 10, 2020 and February 11, 2021. For the fiscal year ending March 31, 2022, the units will vest on November 12, 2021. For the fiscal year ending March 31, 2021 7,500 of Mr. McMurray’s outstanding units will vest on November 10, 2020 and 10,000 will vest on February 11, 2021. For the fiscal year ending March 31, 2022, Mr. McMurray’s units will vest on November 12, 2021.

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(1)

The fair values of the restricted units shown in the table above were calculated based on the closing market prices of our common units on the grant dates, with adjustments made to reflect the fact that the restricted units are not entitled to distributions during the vesting period. The impact of the lack of distribution rights during the vesting period was estimated using the value of the most recent distribution prior to the grant date and assumptions that a market participant might make about future distribution growth. This calculation of fair value is consistent with the provisions of Accounting Standards Codification (“ASC”) 718 Stock Compensation.

(2)	The amounts in this column include matching contributions to our 401(k) plan.

(3)	Mr. Ciolek commenced employment in December 2019, and thus was not a named executive office prior to fiscal year 2020.

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(1)	The fair value of the restricted Service Award units shown in the table above was calculated based on the closing market price of our common units on the grant dates, with adjustments made to reflect the fact that restricted units are not entitled to distributions during the vesting period.

(1)	Reflects Service Awards that have not vested and are held by each named executive officer.

(2)	Calculated based on the closing market price of our common units at March 31, 2020 of $2.60. No adjustments were made to reflect the fact that the restricted units are not entitled to distributions during the vesting period.

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(1)	Mr. Krimbill vested in 100,000, 75,302 and 75,000 Service Awards on July 10, 2019, August 21, 2019 and February 11, 2020, respectively.

(2)	Mr. Karlovich vested in 7,531, 12,500 and 12,500 Service Awards on August 21, 2019, November 13, 2019 and February 11, 2020, respectively.

(3)	Mr. Thuillier vested in 10,166, 5,000 and 5,000 Service Awards on August 21, 2019, November 13, 2019 and February 11, 2020, respectively.

(4)	Mr. McMurray vested in 7,531, 7,500 and 7,500 Service Awards on August 21, 2019, November 13, 2019 and February 11, 2020, respectively.

(5)	Mr. Ciolek vested in 12,500 Service Awards on February 11, 2020.

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•	The median of the annual total compensation of all employees (other than the Chief Executive Officer) was $52,361; and

•	The annual total compensation of Mr. Krimbill, as reported in the Summary Compensation Table above, was $3,136,030.

•	an annual retainer of $80,000;

•	an annual retainer of $20,000 for the chairman of the audit committee;

•	an annual retainer of $15,000 for the chairman of the compensation committee;

•	an annual retainer of $14,000 for each member of the audit committee other than the chairman; and

•	an annual retainer of $10,000 for each member of the compensation committee other than the chairman.

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(1)

Dr. Coady vested in 20,000 Service Awards on July 10, 2019. These units were granted to Dr. Coady while in his role as our President and Chief Operating Officer, Retail Division. Dr. Coady was allowed to retain his unvested units when we sold a portion of our Retail Propane segment to DCC LPG (“DCC”). Dr. Coady did not receive any Service Awards in fiscal year 2019 prior to the termination of his employment. Dr. Coady was granted 24,000 Service Awards on August 13, 2019, of which 8,000 vested on November 13, 2019, 4,000 vested on February 11, 2020 and 4,000 vests each on November 10, 2020, February 11, 2021 and November 12, 2021, respectively.

(2)	Mr. Collingsworth, Mr. Cropper and Mr. Guderian each vested in 8,000 Service Awards on July 10, 2019 and 4,000 Service Awards on February 11, 2020.

(3)	Mr. Reiners was granted 16,000 Service Awards on January 21, 2020, of which 4,000 vested on February 11, 2020 and 4,000 vests each on November 10, 2020, February 11, 2021 and November 12, 2021, respectively.

•	each person or group of persons known by us to be a beneficial owner of more than 5% of our outstanding common units;

•	each director of our general partner;

•	each named executive officer of our general partner; and

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•	all directors and executive officers of our general partner as a group.

(1)	Based on 128,771,715 common units outstanding at May 28, 2020.

(2)	The mailing address for Invesco Ltd. is 1555 Peachtree Street NE, Suite 1800, Atlanta, GA 30309. Invesco Ltd. reported shared voting and dispositive power with respect to all common units beneficially owned. The information related to Invesco Ltd. is based upon its Schedule 13G filed with the SEC for the quarter ended December 31, 2019.

(3)	The mailing address for ALPS Advisors, Inc. is 1290 Broadway, Suite 1000, Denver, CO 80203. ALPS Advisors, Inc. reported shared voting and dispositive power with respect to all common units beneficially owned. The information related to ALPS Advisors, Inc. is based upon its Schedule 13G filed with the SEC for the quarter ended December 31, 2019.

(4)

The mailing address for EIG Neptune Equity Aggregator, L. P. (“EIG”) is 600 New Hampshire Ave. NW, Suite 1200, Washington, DC 20037. EIG reported shared voting and dispositive power with respect to all common units beneficially owned. The information related to EIG is based upon its Schedule 13D filed with the SEC for the quarter ended December 31, 2019. The common units beneficially owned relate to warrants that become exercisable on July 2, 2020. For purposes of calculating ownership percentages, the units underlying the warrants are only deemed outstanding for purposes of calculating EIG’s percentage.

(5)	Does not include 12,500 unvested units that will vest on November 10, 2020, 12,500 unvested units that will vest on February 11, 2021 and 12,500 unvested units that will vest on November 12, 2021.

(6)

Dr. Coady owns 110,304 of these common units. SWC Family Partnership LP owns 2,320,391 of these common units. SWC Family Partnership LP is solely owned by SWC General Partner, LLC, of which Dr. Coady is the sole member. Dr. Coady may be deemed to have sole voting and investment power over these units, but disclaims such beneficial ownership except to the extent of his pecuniary interest therein. The 2012 Shawn W. Coady Irrevocable Insurance Trust, which was established for the benefit of Shawn W. Coady’s children, owns 135,000 of these common units. Dr. Coady may be deemed to have sole voting and investment power over these units, but disclaims such beneficial ownership except to the extent of his pecuniary interest therein. The Tara Nicole Coady Trust II, of which the reporting person is the trustee, owns 12,250 common units. The Colleen Blair Coady Trust, of which the reporting person is the trustee, owns 12,250 common units. Dr. Coady also owns a 12.27% interest in our general partner through Coady Enterprises, LLC, of which he owns 100% of the membership interests.

(7)	Mr. Collingsworth owns 290,500 of these common units. Mr. Collingsworth holds 2,000 of these common units jointly with his spouse, Cindy Collingsworth. Cindy Collingsworth and her sister jointly own 9,500 of these common units. Cindy Collingsworth owns 870 of these common units

(8)	Mr. Cropper owns 38,000 of these common units. The Donna L. Cropper Living Trust, of which Mr. Cropper and his spouse, Donna L. Cropper, are the trustees, owns 25,000 of these common units.

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(9)	Does not include 12,500 unvested units that will vest on November 10, 2020, 12,500 unvested units that will vest on February 11, 2021 and 12,500 unvested units that will vest on November 12, 2021.

(10)

Mr. Krimbill owns 1,261,878 of these common units, which includes 75,000 unvested units that will vest on November 10, 2020, 75,000 unvested units that will vest on February 11, 2021 and 75,000 unvested units that will vest on November 12, 2021. All of the unvested units noted above were reported on Mr. Krimbill’s Form 4. Krim2010, LLC owns 904,848 of these common units. Krimbill Enterprises LP, H. Michael Krimbill and James E. Krimbill own 90.89%, 4.05%, and 5.06% of Krim2010, LLC, respectively. Krimbill Enterprises LP also owns 388,000 of these common units. Krimbill Enterprises LP is controlled by H. Michael Krimbill via his ownership of its general partner, Krimbill Holding Company. H. Michael Krimbill may be deemed to have sole voting and investment power over these units, but disclaims such beneficial ownership except to the extent of his pecuniary interest therein. KrimGP2010 LLC owns 363,555 of these common units. KrimGP2010 LLC is solely owned by H. Michael Krimbill. H. Michael Krimbill may be deemed to have sole voting and investment power over these units. H. Michael Krimbill also owns a 14.81% interest in our general partner through KrimGP2010, LLC, of which he owns 100% of the membership interests and Krimbill Capital Group, LLC, which is owned 100% by the H. Michael Krimbill Revocable Trust, of which Mr. Krimbill is the trustee. Krimbill Enterprises LP, II also owns 130,000 of these common units. Krimbill Enterprises LP, II is controlled by H. Michael Krimbill via his ownership of its general partner, Krimbill Holding Company. H. Michael Krimbill may be deemed to have sole voting and investment power over these units, but disclaims such beneficial ownership except to the extent of his pecuniary interest therein.

(11)	Does not include 7,500 unvested units that will vest on November 10, 2020, 10,000 unvested units that will vest on February 11, 2021 and 10,000 unvested units that will vest on November 12, 2021.

(12)	Does not include 5,000 unvested units that will vest on November 10, 2020, 5,000 unvested units that will vest on February 11, 2021 and 5,000 unvested units that will vest on November 12, 2021.

(13)	The directors and executive officers of our general partner also collectively own a 33.00% interest in our general partner.

(1)

The number of common units that may be delivered pursuant to awards under the LTIP is limited to 10% of our issued and outstanding common units. The maximum number of common units deliverable under the LTIP automatically increases to 10% of the issued and outstanding common units immediately after each issuance of common units, unless the plan administrator determines to increase the maximum number of units deliverable by a lesser amount.

(2)	Our general partner adopted the LTIP in connection with the completion of our initial public offering (“IPO”) in May 2011. The adoption of the LTIP did not require the approval of our unitholders.

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Demand Registration Rights. Certain registration rights parties deemed “Significant Holders” under the agreement may, to the extent that they continue to own more than 4% of our common units, require us to file a registration statement with the SEC registering the offer and sale of a specified number of common units, subject to limitations on the number of requests for registration that can be made in any twelve-month period as well as customary cutbacks at the discretion of the underwriters relating to a potential offering. All other registration rights parties are entitled to notice of a Significant Holder’s exercise of its demand registration rights and may include their common units in such registration. We can only be required to file a total of nine registration statements upon the Significant Holders’ exercise of these demand registration rights and are only required to effect demand registration if the aggregate proposed offering price to the public is at least $10.0 million.

•	Piggyback Registration Rights. If we propose to file a registration statement under the Securities Act to register our common units, the registration rights parties are entitled to notice of such registration and have the right to include their common units in the registration, subject to limitations that the underwriters relating to a potential

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•	Expenses of Registration. With specified exceptions, we are required to pay all expenses incidental to any registration of common units, excluding underwriting discounts and commissions.

•	whether there is an appropriate business justification for the transaction;

•	the benefits that accrue to the Partnership as a result of the transaction;

•	the terms available to unrelated third parties entering into similar transactions;

•	the impact of the transaction on a director’s independence (in the event the related party is a director, an immediate family member of a director or an entity in which a director is a partner, shareholder or executive officer);

•	the availability of other sources for comparable products or services;

•	whether it is a single transaction or a series of ongoing, related transactions; and

•	whether entering into the transaction would be consistent with the Code of Business Conduct and Ethics.

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(1)	Includes fees for audits of the Partnership’s financial statements, reviews of the related quarterly financial statements, and services that are normally provided by the independent accountants in connection with statutory and regulatory filings or engagements, including reviews of documents filed with the SEC and the preparation of letters to underwriters and other requesting parties.

(2)	Includes fees in fiscal year 2020 for a review of financial statements for one of our subsidiaries and fees for fiscal year 2019 for audits of financial statements for businesses divested during the fiscal year.

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(a)	The following documents are filed as part of this Annual Report:

1.	Financial Statements. See the accompanying Index to Financial Statements.

2.	Financial Statement Schedules. All schedules have been omitted because they are either not applicable, not required or the information required in such schedules appears in the financial statements or the related notes.

3.	Exhibits.

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*	Exhibits filed with this report.

**

The following documents are formatted in Inline XBRL (Extensible Business Reporting Language): (i) Consolidated Balance Sheets at March 31, 2020 and 2019, (ii) Consolidated Statements of Operations for the years ended March 31, 2020, 2019, and 2018, (iii) Consolidated Statements of Comprehensive (Loss) Income for the years ended March 31, 2020, 2019, and 2018, (iv) Consolidated Statements of Changes in Equity for the years ended March 31, 2020, 2019, and 2018, (v) Consolidated Statements of Cash Flows for the years ended March 31, 2020, 2019, and 2018, and (vi) Notes to Consolidated Financial Statements.

+	Management contracts or compensatory plans or arrangements.

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•	Utilized a valuation specialist to evaluate:

◦	The methodologies used and whether they were acceptable for the underlying assets or operations and being applied correctly by performing an independent calculation,

◦	The methodologies and assumptions used in the valuation of the real property,

◦	The appropriateness of the replacement cost of the personal property, by performing an independent calculation and inspecting the estimated remaining years of service for the underlying assets based on the original acquisition dates and condition of assets,

◦	The appropriateness of the discount rate by recalculating the weighted average costs of capital and evaluating future market conditions, and

◦	The qualifications of the third party valuation firm engaged by the Partnership based on their credentials and experience.

•	Tested the revenue growth rate and operating margins by comparing such items to the industry projections and conditions found in industry reports as well as historical operating results of the entity acquired.

•	Utilized a valuation specialist to evaluate:

◦	The methodologies used and whether they were acceptable for the underlying assets or operations and being applied correctly by performing an independent calculation,

◦	The appropriateness of the discount rate by recalculating the weighted average costs of capital and evaluating future market conditions, and

◦	Other significant assumptions, including the terminal growth rate.

•	Tested the reasonableness of management’s process for determining the fair value of the reporting units, including the revenue growth rate, forecasted costs and operating margins by comparing such items to the industry projections and

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Our Crude Oil Logistics segment purchases crude oil from producers and marketers and transports it to refineries or for resale at pipeline injection stations, storage terminals, barge loading facilities, rail facilities, refineries, and other trade hubs, and provides storage, terminaling and transportation services through its owned assets. Our activities in this segment are supported by certain long-term, fixed rate contracts which include minimum volume commitments on our pipelines.

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Our Water Solutions segment transports, treats, recycles and disposes of produced and flowback water generated from crude oil and natural gas production. We also dispose of solids such as tank bottoms, drilling fluids and drilling muds and perform other ancillary services such as truck and frac tank washouts. As part of processing water, we are able to aggregate recovered crude oil, also known as skim oil, that was contained in the water and sell the crude oil. We also sell brackish non-potable water to our producer customers to be used in their crude oil exploration and production activities. Our activities in the Water Solutions segment are underpinned by long-term, fixed fee contracts and acreage dedications, some of which contain minimum volume commitments, with leading oil and gas companies including large, investment grade producer customers.

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Our Liquids and Refined Products segment conducts marketing operations for natural gas liquids, refined petroleum products and biodiesel to a broad range of commercial, retail and industrial customers across the United States and Canada. These operations are conducted through our 28 company-owned terminals, other third party storage and terminal facilities, common carrier pipelines and our extensive fleet of leased railcars. We also provide natural gas liquid and refined product terminaling and storage services at our salt dome storage facility joint venture in Utah and marine exports through our facility located in Chesapeake, Virginia. We employ a number of contractual and hedging strategies to minimize commodity exposure and maximize earnings stability of this segment.

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•	Level 1: Quoted prices in active markets for identical assets and liabilities that we have the ability to access at the measurement date.

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Level 2: Inputs (other than quoted prices included within Level 1) that are either directly or indirectly observable for the asset or liability, including (i) quoted prices for similar assets or liabilities in active markets, (ii) quoted prices for identical or similar assets or liabilities in inactive markets, (iii) inputs other than quoted prices that are observable for the asset or liability, and (iv) inputs that are derived from observable market data by correlation or other means. Instruments categorized in Level 2 include non-exchange traded derivatives such as over-the-counter commodity price swap and option contracts and forward commodity contracts. We determine the fair value of all of our derivative financial instruments utilizing pricing models for similar instruments. Inputs to the pricing models include publicly available prices and forward curves generated from a compilation of data gathered from third parties.

•	Level 3: Unobservable inputs for the asset or liability including situations where there is little, if any, market activity for the asset or liability.

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(1)	The amount for the year ended March 31, 2020 includes $0.2 million assumed in the Hillstone acquisition (see Note 4).

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(1)	Ownership interest percentages are at March 31, 2020.

(2)	This is an investment that we acquired as part of an acquisition in November 2019 (see Note 4), and represents certain membership interests in a limited liability company and are related to specific land operations.

(3)	This is an investment that we acquired as part of an acquisition in November 2019 (see Note 4), and represents certain membership interests in a limited liability company and are related to specific land operations.

(4)	This is an investment that we acquired as part of an acquisition in November 2019 (see Note 4), and represents certain membership interests in a limited liability company and are related to specific water services operations.

(5)	This is an investment with a related party. See Note 13 for a further discussion.

(6)	This is an investment that we acquired as part of an acquisition in August 2018.

(7)	This is an investment that we acquired as part of an acquisition in March 2019.

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(1)

Represents the noncurrent portion of a loan receivable associated with our interest in the construction of a natural gas liquids loading/unloading facility (the “Facility”) that is utilized by a third party. As of March 31, 2020, we are owed a total of $26.7 million under this loan receivable, of which approximately $24.2 million is recorded within prepaid expenses and other current assets in our consolidated balance sheet. Our loan receivable is secured by a lien on the Facility. The third party filed for Chapter 11 bankruptcy in July 2019. For a further discussion, see Note 17. The remaining amount represents the noncurrent portion of a loan receivable with Victory Propane.

(2)

Represents minimum volumes of product we are required to leave on certain third-party owned pipelines under long-term shipment commitments. At March 31, 2020, line fill consisted of 335,069 barrels of crude oil and 262,000 barrels of propane. During the three months ended March 31, 2020, we recorded an impairment of $7.7 million primarily due to adjusting the cost basis of pipeline line fill to the market price of propane as of March 31, 2020. At March 31, 2019, line fill consisted of 335,069 barrels of crude oil and 262,000 barrels of propane. Line fill held in pipelines we own is included within property, plant and equipment (see Note 5).

(3)

Represents the noncurrent portion of minimum shipping fees paid in excess of volumes shipped, or deficiency credits, for one contract with a crude oil pipeline operator. This amount can be recovered when volumes shipped exceed the minimum monthly volume commitment (see Note 9). As of March 31, 2019, the deficiency credit was $23.5 million. In October 2019, we extended our commitment with this crude oil pipeline operator and this extension allows us an additional 5.0 years to recapture the minimum shipping deficiency fees (see Note 9). As of March 31, 2020, the deficiency credit was $21.7 million, of which $4.3 million is recorded within prepaid expenses and other current assets in our consolidated balance sheet.

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(1)	This amount includes distributions to preferred unitholders, the final accretion for the beneficial conversion of the Class A Preferred Units (as defined herein) and the excess of the Class A Preferred Units repurchase price over the carrying value of the units, as discussed further in Note 10.

(2)	Net loss (income) allocated to the general partner includes distributions to which it is entitled as the holder of incentive distribution rights.

(3)	This amount represents the excess of the repurchase price over the fair value of the warrants, as discussed further in Note 10.

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(1)	Tank bottoms, which are product volumes required for the operation of storage tanks, are recorded at historical cost. We recover tank bottoms when the storage tanks are removed from service. Line fill, which represents our portion of the product volume required for the operation of the proportionate share of a pipeline we own, is recorded at historical cost.

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(1)	Amount for the year ended March 31, 2018 primarily relates to a gain related to the sale of excess pipe, partially offset by losses from the disposal of certain assets and the write-down of other assets.

(2)	Amount for the year ended March 31, 2020 relates to an impairment charge for inactive saltwater disposal facilities as well as losses from the disposal of certain assets and the write-down of other assets.

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(1)	Includes debt issuance costs related to the Revolving Credit Facility (as defined herein). Debt issuance costs related to fixed-rate notes and Term Credit Agreement (as defined herein) are reported as a reduction of the carrying amount of long-term debt.

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(1)	Debt issuance costs related to the Revolving Credit Facility are reported within intangible assets, rather than as a reduction of the carrying amount of long-term debt.

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(1)	Represents the maximum ratio for the period presented.

(2)	Represents the minimum ratio for the period presented.

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(1)	On March 15, 2019, we redeemed all of the remaining outstanding 2019 Notes. Loss on the early extinguishment of debt for the 2019 Notes during the year ended March 31, 2019 is inclusive of the write off of debt issuance costs of $0.4 million. The loss is reported within gain (loss) on early extinguishment of liabilities, net within our consolidated statement of operations.

(2)	On October 16, 2018, we redeemed all of the remaining outstanding 2021 Notes. Loss on the early extinguishment of debt for the 2021 Notes during the year ended March 31, 2019 is inclusive of the write off of debt issuance costs of $3.8 million. The loss is reported within gain (loss) on early extinguishment of liabilities, net within our consolidated statement of operations.

(1)	Loss on early extinguishment of debt for the 2019 Notes during the years ended March 31, 2019 and 2018 is inclusive of the write off of debt issuance costs of less than $0.1 million and $0.2 million, respectively. The loss is reported within gain (loss) on early extinguishment of liabilities, net within our consolidated statement of operations.

(2)	Loss on early extinguishment of debt for the 2023 Notes during the years ended March 31, 2019 and 2018 is inclusive of the write off of debt issuance costs of $0.1 million and $1.2 million, respectively. The loss is reported within gain (loss) on early extinguishment of liabilities, net within our consolidated statement of operations.

(3)	Gain on early extinguishment of debt for the 2025 Notes during the years ended March 31, 2020 and 2018 is inclusive of the write off of debt issuance costs of less than $0.1 million and $1.8 million, respectively. The gain is reported within gain (loss) on early extinguishment of liabilities, net within our consolidated statement of operations.

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(1)	Loss on the early extinguishment of debt for the Senior Secured Notes during the year ended March 31, 2018 is inclusive of the write off of debt issuance costs of $4.3 million. The loss is reported within gain (loss) on early extinguishment of liabilities, net within our consolidated statement of operations.

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(1)	This amount primarily relates to the sales of our Bakken and South Pecos water disposal businesses (see Note 17).

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(1)	Our crude oil index-price purchase commitments exceed our crude oil index-price sales commitments (presented below) due primarily to our long-term purchase commitments for crude oil that we purchase and ship on the Grand Mesa Pipeline. As these purchase

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(1)	Relates to commodity derivative assets and liabilities that are expected to be net settled on an exchange or through a netting arrangement with the counterparty. Our physical contracts that do not qualify as normal purchase normal sale transactions are not subject to such netting arrangements.

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(1)	We may have fixed price physical purchases, including inventory, offset by floating price physical sales or floating price physical purchases offset by fixed price physical sales. These contracts are derivatives we have entered into as an economic hedge against the risk of mismatches between fixed and floating price physical obligations.

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(1)	We adopted ASC 606 as of April 1, 2018. Revenue reported in fiscal year 2018 has not been changed from its previous presentation.

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(1)	Includes $25.9 million and $0.5 million of non-US long-lived assets at March 31, 2020 and 2019, respectively.

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(1)	Includes $37.8 million and $12.0 million of non-US total assets at March 31, 2020 and 2019, respectively.

(1)	Amount primarily relates to purchases of crude oil under the definitive agreement we signed with WPX, as discussed further below.

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Minimum volume commitments. We receive a shortfall fee if the customer does not deliver a certain amount of volume of produced water over a specified period of time. At each reporting period, we make a determination as to the likelihood of earning this fee. We recognize revenue from these contracts when (i) actual volumes are received; and (ii) when the likelihood of a customer exercising its remaining rights to make up the deficient volumes under minimum volume commitments becomes remote (also known as the breakage model).

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Tiered pricing. For contracts with tiered pricing provisions, the period in which the tiers are earned and settled (i.e. the “reset period”) may vary from monthly to over a period of multiple months. If the tiered pricing is based on a month, we allocate the fee to the distinct daily service to which it relates. If the tiered pricing spans across multiple reporting periods, we estimate the total transaction price at the beginning of each reset period, based on the expected volumes. We revise our estimates of variable consideration at each reporting date throughout each reset period.

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Volume discount pricing. Volume discount pricing is a form of variable consideration whereby the customer pays for the volumes delivered on a cumulative basis. Similar to tiered pricing, the period in which the cumulative volumes are earned and settled (i.e. the “reset period”) may vary from daily to over a period of multiple months. If the volume discount is based on a month, we allocate the fee to the distinct daily service to which it relates. If the volume discount period spans across multiple reporting periods, we estimate the total transaction price at the beginning of each reset period, based on the expected volumes. We revise the estimate of variable consideration at each reporting date.

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Prepayments. Some revenue contracts contain prepayment provisions within our Liquids and Refined Products segment. Revenue received related to our underground cavern storage services is received upfront at the beginning of the contract period and is deferred until services have been rendered. In some cases, we also receive prepayments from customers purchasing commodities, which allows the customer to secure the right to receive their requested volumes in a future period. Revenue from these contracts is initially deferred, thus creating a contract liability.

•	Multi-period contract in which fee escalates each subsequent year of the contract. Revenue from these contracts is recognized over time based on a weighted average of what is expected to be received over the life of the contract. As the actual amount billed and received from the customer differs from the amount of revenue recognized, a contract liability is recorded.

•	Tiered pricing and volume discount pricing. As described above, we revise our estimates of variable consideration at each reporting date throughout each reset period. As the actual amount billed and received from the customer differs from the amount of revenue recognized, a contract liability is recorded.

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Capital reimbursements. Certain contracts in our Water Solutions segment require that our customers reimburse us for capital expenditures related to the construction of long-lived assets, such as water gathering pipelines and custody transfer points, utilized to provide services to them under the revenue contracts. Because we consider these amounts as consideration from customers associated with ongoing services to be provided to customers, we defer these upfront payments in deferred revenue and recognize the amounts in revenue over the life of the associated revenue contract as the performance obligations are satisfied under the contract.

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(1)

Amount for the year ended March 31, 2020 includes a loss of $182.1 million on the sale of TPSL, a loss of $6.3 million on the sale of Mid-Con, a loss of $14.5 million on the sale of Gas Blending and a loss of $1.0 million on the sale of virtually all of our remaining Retail Propane segment to Superior on July 10, 2018. Amount for the year ended March 31, 2019 includes a gain of $408.9 million on the sale of virtually all of our remaining Retail Propane segment to Superior on July 10, 2018, partially offset by a loss of $1.3 million on the sale of a portion of our Retail Propane segment to DCC on March 30, 2018 related to a working capital adjustment. Amount for the year ended March 31, 2018 includes a gain of $89.3 million on the sale of a portion of our Retail Propane segment to DCC, partially offset by the sale of other assets prior to the sale to DCC.

(2)	Amounts include income (loss) attributable to redeemable noncontrolling interests. Loss attributable to redeemable noncontrolling interests was $0.4 million for the year ended March 31, 2019 and income attributable to redeemable noncontrolling interest was $1.0 million for the year ended March 31, 2018.

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•	During the fourth quarter of fiscal year 2020, we recorded a goodwill impairment charge related to the Water Solutions segment (see Note 6);

•	On March 30, 2020, we sold Gas Blending and recorded a loss (see Note 18);

•	On January 3, 2020, we sold Mid-Con and recorded a loss (see Note 18);

•	On October 31, 2019, we acquired Hillstone (see Note 4);

•	On September 30, 2019, we sold TPSL and recorded a loss (see Note 18); and

•	On July 2, 2019, we acquired Mesquite (see Note 4).

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•	During the fourth quarter of fiscal year 2019, we recorded a goodwill impairment charge related to Sawtooth (see Note 6);

•	On February 28, 2019, we sold our South Pecos water disposal business and recorded a gain (see Note 17);

•	On November 30, 2018, we sold our Bakken saltwater disposal business and recorded a gain (see Note 17);

•	On July 10, 2018, we sold virtually all of our remaining Retail Propane segment and recorded a gain (see Note 18);

•	On May 3, 2018, we sold our interest in E Energy Adams, LLC and recorded a gain (see Note 17); and

•	During fiscal year 2019, we repurchased a portion of our 2019 Notes and 2023 Notes and redeemed the outstanding 2019 Notes and 2021 Notes and recorded a loss on the early extinguishment of these notes (see Note 8).

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